Combine chiles and boiling water; let stand 30 minutes. Drain.
Combine chiles, onion, and next 6 ingredients (onion through garlic) in a medium saucepan. Place over medium-high heat; bring to a boil. Reduce heat; simmer 20 minutes. Remove from heat; cool 15 minutes. Place onion mixture in a blender or food processor; process until blended (do not overblend). Add tomato sauce; stir well.